I haven't come across any stats or traditional methods that can be used to calculate Bitcoin's fair value, but does that mean Bitcoin doesn't have a fair value?
The total market value of a currency, its "monetary base", is driven by two things, transactional demand and reservation demand.
1. Transactional demand - Daily transaction volume.
2. Reservation demand - Hoarding/long-term investment.
It is expected that with more merchant adoption the transactional demand would increase.
3. Hurdle rate - Rate of return required to compensate for the risks associated with holding Bitcoin. Yeah, technopolitical hurdles or backlash from a country can have an impact on Bitcoin's expected value.
Theoretically, the fair-market value of one BTC should simply be the dividend of its predicted future monetary base (total market cap) and BTC in circulation, discounted by a "hurdle rate."
All three of those make sense--I can see how each would contribute to bitcoin's value/price. But I don't see how one could possibly come up with any kind of formula/analysis method to say how they actually do contribute. For #1, you at least have some data that you can try to use, but I think #2 and #3 are impossible to calculate. Even worse, I think they all interact and feed off of each other. For example, if people see higher transactional demand (#1), they may decide to hold their bitcoin longer (#2). Or if a country tries to ban bitcoin (#3), that could lead to more transactions (#1) and less investment (#2) as people sell, but then there would be fewer users so the transactions would go down (#1), which would discourage people from buying (#2), except that price has now fallen a lot, so more people see it as a good buy, so investment starts to climb again (#2), and on and on we go.... |
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Very valid points indeed. It just gets a bit difficult to really have discussions on this forum since the terminology gets heavily conflated and used improperly.
Quite true, especially when people get emotionally involved and just start using buzzwords that they've heard before. I can't count the number of times I've seen the term "ponzi scheme" misused (often in reference to bitcoin). Point 2 is a very nice way to look at it: Either we're in the biggest bubble in a very long time, or there's no bubble at all.
Indeed. The hard part is figuring out which it is before the rest of the market does.  And really, right now I think it can still go either way. It's like a financial instrument that's just experienced a sharp rise in price. One of two things needs to happen for the price to go higher: either consolidation or a pullback. Or, another way to put that is that either value needs to catch up to price over time (consolidation), or price needs to catch up to value (pullback). Regarding bitcoin's long-term outlook, either value needs to catch up to price (adoption increases), or price needs to catch up to value (price pullback/crash). |
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I'm a bit frightened by the all consuming optimism of many of the people here. The model is interesting, but does it scale? There are a lot of models that are only accurate at smaller scales, and then drift off into nowhere. Bitcoin has reached big numbers now, but how will the model hold at 500B value? Anyways, I hope you all don't get your hopes up too much. At least do some more research and develop some reasons for why you think 25k is a reasonable price for bitcoin.
This is a good point, and something that concerns me, as well. The prevailing sentiment around here seems to be that you can't go wrong by buying bitcoin at any price level, which of course has held so far. But yes, at some point, the price can't keep scaling. Personally, while I've been skeptical of the price increase and optimism this year, such optimism mostly seems to be the sentiment of those in the bitcoin community. There's still plenty of skepticism by large financial institutions and governments, which means there's still potential for more growth. |
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I'm sure today many regret users for selling bitcoins some time ago, they panicked because they think that bitcoin prices continue to drop so sell bitcoin at any price.
Getting panic and that at the time when you see yourself getting in loss is quite a normal thing. Everyone has different level of patience. Some keep on controlling their nerves no matter what the conditions are, while other get panic in the very early stages. We actually need to develop this habit of remaining cool and calm almost all the time so that we may be able to control our nerves at hard times. One way to try to avoid a lot of this is to wait until a time of panic selling to buy in, and take the usual advice of investing incrementally. Take a trade when it looks like the price may be bottoming out, and then just don't look at it for a few days. If the price is higher when you look again, then you're in good shape. If it's a lot lower, buy in incrementally again, and then don't look for a few days. Obviously I can't guarantee that this will work, but doing this would have worked very well during the crash in September if you bought when the price fell like $1000 in a day ( that's panic selling). |
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even it will cross 7000$ end of this year.
I think it really can cross $10K somewhen around Christmas. No, it can not, it's unreasonable, it never happens when the value of the bitcoin is always adjusted, in some way, when bitcoin goes up too fast, there will be something alkaline brake it. I agree that if the price rises too quickly, we're much more likely to get a sharp correction/crash, as it true with pretty much any financial instrument. Overall, though, while bitcoin's rise this year has been very fast-paced, there has been a lot of good consolidation and some dips that take some of the froth off of the market. At least on a percentage basis, we have yet to see anything like some of the insane increases in the past, like near the end of 2013 when price quadrupled in about 3 weeks from around $250 to over $1000. |
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I don’t have a plan to sell mine bitcoin, I hold them as long I have a financial, I think, will sell it when bitcoin double the price in this year, so I think if the value reaches 10k I guessed that is enough.
I must say that there is nothing more beneficial than that of holding of bitcoin and that too for as long period of time as you can. Selling of bitcoin can hardly result in any kind of fruitful result. We all know this thing that the market price of bitcoin will continue to increase in the coming days, so we need to remain patient and we actually need to hold our bitcoins for having better profit. Exactly therefore we don't sell right away and be contented with a small profit, there will be more price increase to come and we can benefit on that if we keep holding our precious bitcoins. Now that bitcoin is getting more stronger and FUD is not that effective anymore we should ride with the trust of the people as it will just make the price to go up. Be careful about this. You can bet that there will be plenty more FUD to come, and you can bet that it will cause some crazy gyrations in price. Bitcoin did a great job of shrugging off the China issues in September, but we still had a quick 40% drop, and it took a couple weeks to recover. I'm sure there are still some large crashes coming. |
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I know nothing about Sky Way Coin, but if there are serious problems with it, the odds are very much against it surviving. My general take on such situations is that if I have something left of my investment, it's better to get out. If I've lost just about everything and the further loss if it goes to zero is minimal, I might just hold onto it, hoping that someday it will either recover somehow, or that it will at least get pumped.
Whatever you do, here's one piece of advice: make sure that you contemplate this loss and how you got there. Stare it in the face. Think through your experience with this investment, and come to terms with the mistake you made. It will be uncomfortable; it will be painful. But if you accept that you made a mistake and find peace, you are much less likely to make the same mistake again. If you try to ignore it, play down it's importance, or blame someone/something else, you're much more likely to repeat it.
Thanks A lot, yah I have been writing it on my journal yesterday To painful  Yeah, I'm sorry things didn't work out for you (I can empathize, having been in similar situations before), but I'm glad to see that you're writing about it. Anyone who trades for a while will make their share of painful mistakes. Facing them builds strength and character, and will hopefully better prepare you for future trading (as well as other things in life). |
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A lot of people are saying that segwitx2 is not going to have a replay action, and per every bitcoin you send, you are going to send a b2x coin, so there are no free coins at all since you are going to have them masked on your wallet. They are a garbage, i always knew that their developers were greedy as fuck, and i was not wrong with that prediction because the whole community knows that at the moment.
it is probably one of the worst forks that have ever existed.
I was doing some research on replay protection last night, and my understanding of it is that without replay protection, it's possible, but not guaranteed, that sending coins on one branch of the fork will cause them to be sent on the other. Replay protection just guarantees that that can't happen. I also read that there are ways around this so that if you are careful and know what you're doing, you can ensure that a transaction on one chain won't show up on the other. However, I don't yet understand what needs to be done. I suggest doing your own research to understand all of this better. |
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There's already a few exchanges starting to trade B2X.
If we look at the previous few major forks(BCC, BTG, etc.), then when they happened bitcoin actually didn't move much at all. For BTG it was a small fall in price that was later recovered pretty soon. For BCC it actually rose.
It'll depend on the exact market conditions going into the fork.
Bitcoin Cash and Bitcoin Gold -- neither are good precedents here. The reason BTC rallied in late July/August was because of BIP91 and resolution of the BIP148 chain split threat. BCH was just a sideshow altcoin. BTG is even more of a sideshow... it hasn't even launched and people are increasingly not taking it seriously at all. BCH has replay protection and BTG is supposed to. That's quite a bit different than B2X, which has no replay protection and is backed by much more of the ecosystem. There could be a very messy split, and I'm not sure that the futures market is totally pricing in all the possibilities right now. Agreed--this is going to be a much bigger deal. I'm not sure that the futures market is going to be a good indicator here. Unless it starts to become fairly clear who's going to go which way when we get closer to the fork, pricing is going to be pure speculation. B2X futures volatility may make bitcoin's price action look calm by the time everything settles. |
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You can't predict what Bitcoin's price is going to be by next week, let alone 2018. I don't even know why this kind of questions get asked, is not like anyone has a valid answer to them.
You are absolutely right that we have no idea what it's really going to be. I think a lot of people just enjoy speculating--dreaming big and such. It can be useful if it leads to a good discussion. Sometimes people bring up arguments on either the bullish or bearish side that you haven't heard before (or at least that's been true for me). But it can be unproductive if people just pull numbers out of their bottoms without any rational explanation for it. |
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5 Reasons Why Bitcoin Price is Not Tulip Mania: Nasdaq.com https://cointelegraph.com/news/5-reasons-why-bitcoin-price-is-not-tulip-mania-nasdaqcom1. The Growing Acceptance of Bitcoin as Legal Tender 2. Increasing Merchant Adoption 3. Bitcoin Is Increasingly Acting as a Store of Wealth in Distressed Economies 4. Bitcoin Has Only Just Gone Mainstream 5. Bitcoin’s Supply Is Limited The only thing that can derail this is the scaling issue.
Bitcoin is back up to $5,858. I think that bitcoin has a lot more growth potential. But I think there are other things that could derail it. One is a concerted effort by major governments to ban or regulate it to death. Another is the emergence of a superior coin that could replace it. As things stand right now, most of the crypto I have is in bitcoin for growth purposes. But when trying to move money around, I prefer not to use bitcoin. It takes way too long, and the transaction fees are way too high. I think it's a great investment asset, but I don't think it's a great currency. I do agree that the transaction fees are starting to get ridiculous with Bitcoin. If you are not in a hurry, you can reduce the fees you want to pay and it will still go through though it will take a bit longer. I have been able to pass through transactions with extremely low fees though it did take quite a bit longer to process. All in all, I am quite unhappy about the fact that these fees are starting to get higher and higher. The above reason is why no one will be able to use Bitcoin to go grocery shopping and that will result in Bitcoin always being the black swan in the family of payment processing. There was one time several months ago that I paid the recommended transaction fee (which I later verified as reasonable for the size of the transaction), and even after 24 hours it hadn't gone through. I had to use some kind of transaction accelerator, and even with that I think it still took at least several more hours to get the first confirmation. That is simply unacceptable if you want to buy something or place a trade. |
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Seems like we're on the same page then. It's just difficult to really work things out sometimes, since language is extremely ambiguous in nature, so the dialogue has to bounce back and forth a few times to clear everything up when it comes to more complex topics.
Agreed. I think we are on the same page now. Thanks for a great discussion. It has helped me think through the way bitcoin, currencies, and economic systems work more than I have in the past. Now with that said, I'm not sure we can talk about a bubble. Since there's no efficient price finding mechanism in place for Bitcoin yet.
Until enough people hold Bitcoins for the exchange rate to stay relatively calm during market movements we won't be able to make any accurate estimates about "the value" of Bitcoin.
I have a few thoughts here. First, technically speaking, there is indeed no proper way to determine a bitcoin's value, so there's no way to say definitively that we're in a bubble. Second, one could argue that since bitcoin doesn't really have the backing of an economic system yet, as we discussed, it's one of the biggest bubbles in history today. However, that could completely change in the future if/as adoption continues to grow. Third, one could look at bitcoin's history to make "informal bubble calls," meaning that price has gone too far too fast and is likely to undergo a very significant correction (e.g., 50%+). I tend to look at bitcoin bubble discussions using all three views, but I think that #2 and #3, if used, need to be discussed in the context of #1, meaning that we first should acknowledge that it's not possible right now, by definition, to say whether bitcoin price is a bubble. So I think we agree there. It will also heavily depend on whether Bitcoin is used as an asset only, or as a currency for daily purchases, or even as the "fundamental" currency against which every other cryptographic asset is traded against. If it's traded against traditional assets (or if traditional assets make their way on the blockchain) the total value could easily crack the trillions.
But that involves so many factors that it's hard, if not impossible, to tell when or if that will ever happen.
For reference, the largest stock exchanges are around one trillion in size each. So if Bitcoin was the gateway into all cryptographic assets a value of one trillion wouldn't really be high in the coming decade.
If it was used for daily exchanges that would be several tens of trillions. If it was both, then we're starting to approach one hundred trillion. But it could also find itself replaced at some point.
In either case, since we lack a price finding mechanism it's not really possible to talk about a bubble. There are plenty of ways to justify prices 10 to 1000 times higher, but nobody really know if Bitcoin will take any of these ways yet.
Yep, I think this all makes very good sense, and it's a well-balanced view. |
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This prediction may seem to be optimistic,but if we analyze the previous rise in bitcoin price from just $650 to $5,700 now,it also seems realistic figure to be achieved by 2022.Five years more and each year,if bitcoin price just doubles,then even $25,000 price could be achieved,
What would make it a little bit difficult is that frequent hard forks which would be occur in future.But One thing is for sure that bitcoin is going to change fortunes of many people through out the world.
I agree that there has been a troubling trend recently in the number of hard forks that are being done to create extra coins. However, my guess is that most of them will end up being more or less dismissed as bitcoins cash and gold have been. Forks like the upcoming segwit2x certainly have more potential to cause problems, but those obviously don't occur nearly as often. |
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Most of that is spot on. The only point that is still questionable is the idea of "how much anything should be worth". Even when you have a currency "backed up by a country's productivity", both can arbitrarily be decided to define each other. But each on its own has no inherent value whatsoever. Which is why even gold is inherently worthless. The only reason people can't think of Gold as worthless is because a lot of people have decided that it's not. The same is happening with Bitcoin. Even if it has no inherent value, that doesn't matter because nothing in this world does. As long as the quantity is limited and the item can be moved around easily in portions it can be used as a currency. But again, no matter what item you choose, it is worthless on its own.
Let's get down to basics. What does it mean for something to have intrinsic value (i.e., to be worth something)? This isn't exactly a technical definition, but it seems to me that an object has intrinsic value if it's useful for something in a fundamental way, apart from other things. For example, corn has intrinsic value because it can be used for food. Cotton has intrinsic value because it can be used to make clothing. Wood has intrinsic value because it can be used as fuel or to construct buildings. By that definition, gold does have some intrinsic value, as it's useful for computer chips, some chemical processes, and of course for making things that are beautiful to behold (jewelry, etc.). Its price is inflated because many people have agreed to make it a store of value, but it's still useful for things apart from being a type of currency. Moving on to pure currencies...a dollar bill, by itself, is worthless (except maybe as a tiny bit of fuel, I suppose). The same is true of a bitcoin. However, as I said, the dollar has at least been defined (and collectively agreed upon) to represent part of the US economy. Using a grossly oversimplified example, let's say the entire US economy consisted of the production of 5 ears of corn, and let's say that only 1 dollar has been created to represent the US economy. Assuming you could do nothing else with that dollar, and putting aside all other considerations (which are many), it would make sense that each ear of corn would be worth 20 cents. If only 2 ears of corn had been produced, each would be worth 50 cents. Of course the global economy is vastly more complex, but on a basic level, all of the dollars out there can be mapped to the value of the US economy to give some general sense of what each dollar should be worth. But when you look at bitcoin, there's nothing specific that it can be mapped to. If bitcoin became the official currency of turnip producers, then you could get some idea of the value of a bitcoin based on how well the turnip crops did this year. But without some sort of "anchor" like this, there's no way to figure out the value of a bitcoin, which is why it has such ridiculous volatility. The point that I've been trying to make is that nothing in this world has an intrinsic value (an absolute measure of value that can universally be agreed upon by everyone) and that value is decided arbitrarily by the two parties of a trade. Ah, ok, I think I understand what you're saying. I think we're arguing more about semantics than economic principles. You're talking about an intrinsic value, which you define as an exact value. By that definition, yes, the same thing will have a different value to different people. I've simply been talking about whether or not something has a value greater than zero to someone. Your example would be correct, but it applies more to Bitcoin than it does to the US Dollar. The US Dollar is being printed rather arbitrarily by the Federal Reserve. As such, whatever mapping you have is not accurate as it is not updated sufficiently fast to accommodate for the change in monetary supply. A $1 Whopper will still be a $1 Whopper even though the supply of USD has multiplied several times over, while the economy has not grown anywhere near as much.
Yes, I agree with you about bitcoin being a currency for my example. In my example, I did not state that the money supply was fixed at $1, but that's what I had intended (in my head, that was part of "putting aside all other considerations"). You are also correct that that mapping will not be very accurate, particularly on a short-term basis. As I said, I was oversimplifying things. It certainly takes a while for prices to change based on money supply changes. There are also lots of other factors that can change things significantly, like if other countries treat the dollar as a store of value and buy it for investment purposes. However, money supply effects do eventually propagate throughout the system. If the Fed doubled the money supply overnight, that $1 Whopper would not cost $2 the next day, but its price will likely increase over the following months. Hence, whichever anchor you try to decide on doesn't matter. Because the anchor itself is always going to be so dynamic that it might as well be arbitrary. And Bitcoin, unlike Gold and US Dollars, at least has a fixed supply that can not be changed by the will of a very tiny group of people. As such it would remove a significant amount of arbitration from the financial system once a large enough group of people shifts over to use it (or another crypto) as their main currency.
Yes, this is exactly what I was saying before about how bitcoin doesn't have a way to value it because it doesn't have a large enough group of people using it as their main currency: "So I think that bitcoin could work just as well as gold as a currency, but the problem is that right now it doesn't. As a currency, it just sits next to all other currencies. It isn't backed by a particular economic system (like a country, state, etc.) that includes well-defined/well-known production or services of some sort, so it's not really possible to figure out how much it should be worth." |
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It is really hard to say if bitcoin is a bubble or not. What I know is that bitcoin don't offer anything
in return when you invest on it. And bitcoin is don't have any promises that it will perform well to
increase it's worth.
Bitcoin's price is merely from the demand it's getting from people without giving any promises. So is it a bubble?
Fiat currencies are literally worthless by definition so that argument doesn't really hold at all. Bitcoin takes a lot of effort/money to create and carries large risks, all of which are factored into the price. Furthermore, it's the gateway into a whole new class of investment assets, so that adds to the value of Bitcoin as well. And lastly, it has a technology driving it that is far superior to traditional financial instruments. So saying that Bitcoin doesn't offer anything in return is complete nonsense. I think AmXProX's point is that you can't trade bitcoin in for anything, just like you can't trade fiat in for anything (as opposed to a commodity-backed currency in which you can trade in the currency for the commodity). There are indeed things that make bitcoin valuable, but it's not backed by anything, and there's nothing to really determine how much it should be worth. Bitcoin could function just as well at $1000/coin as it can at $6000/coin. In fact, while the hash rate would drop and theoretically increase the potential for someone to mount a 51% attack against it, bitcoin would probably still function at $100, or maybe even $10. That's the case with any denominator though. Even if you take Gold and reintroduce it as a currency, nobody will be able to tell you what that piece of Gold should be worth. Because there is no such value. The value always strictly depends on two trading parties coming to an agreement. As such, it makes literally no difference whether we decide to all collectively use Gold, Fiat, or Bitcoin as our standard currency. The amount of goods traded will adjust accoding to the supply and demand of currency vs goods. Bitcoin is by far the most convenient and efficient solution though, and more sophisticated cryptos will be even more so. Ok, so this is kind of tricky, but I think we actually agree somewhat. The benefit of using a gold-backed currency (or gold itself) is that the supply is tangible, limited, and cannot be changed easily. In essence, your country's supply of gold represents the value/worth of your country's economy. If you have 1000 oz of gold, then each ounce represents 1/1000 of your country's economic output/worth/wealth. If your economy grows (increases in productivity and wealth), each ounce of gold is worth more, and vice-versa. The problem with fiat currency, of course, is that a government can increase the supply at will, which devalues it. Bitcoin is not tangible, but it does have the advantage of limited supply, and actually its even better than gold in that the supply is completely fixed (assuming that enough people don't decide to increase the cap, which hopefully will never happen). So I think that bitcoin could work just as well as gold as a currency, but the problem is that right now it doesn't. As a currency, it just sits next to all other currencies. It isn't backed by a particular economic system (like a country, state, etc.) that includes well-defined/well-known production or services of some sort, so it's not really possible to figure out how much it should be worth. Most of that is spot on. The only point that is still questionable is the idea of "how much anything should be worth". Even when you have a currency "backed up by a country's productivity", both can arbitrarily be decided to define each other. But each on its own has no inherent value whatsoever. Which is why even gold is inherently worthless. The only reason people can't think of Gold as worthless is because a lot of people have decided that it's not. The same is happening with Bitcoin. Even if it has no inherent value, that doesn't matter because nothing in this world does. As long as the quantity is limited and the item can be moved around easily in portions it can be used as a currency. But again, no matter what item you choose, it is worthless on its own. Let's get down to basics. What does it mean for something to have intrinsic value (i.e., to be worth something)? This isn't exactly a technical definition, but it seems to me that an object has intrinsic value if it's useful for something in a fundamental way, apart from other things. For example, corn has intrinsic value because it can be used for food. Cotton has intrinsic value because it can be used to make clothing. Wood has intrinsic value because it can be used as fuel or to construct buildings. By that definition, gold does have some intrinsic value, as it's useful for computer chips, some chemical processes, and of course for making things that are beautiful to behold (jewelry, etc.). Its price is inflated because many people have agreed to make it a store of value, but it's still useful for things apart from being a type of currency. Moving on to pure currencies...a dollar bill, by itself, is worthless (except maybe as a tiny bit of fuel, I suppose). The same is true of a bitcoin. However, as I said, the dollar has at least been defined (and collectively agreed upon) to represent part of the US economy. Using a grossly oversimplified example, let's say the entire US economy consisted of the production of 5 ears of corn, and let's say that only 1 dollar has been created to represent the US economy. Assuming you could do nothing else with that dollar, and putting aside all other considerations (which are many), it would make sense that each ear of corn would be worth 20 cents. If only 2 ears of corn had been produced, each would be worth 50 cents. Of course the global economy is vastly more complex, but on a basic level, all of the dollars out there can be mapped to the value of the US economy to give some general sense of what each dollar should be worth. But when you look at bitcoin, there's nothing specific that it can be mapped to. If bitcoin became the official currency of turnip producers, then you could get some idea of the value of a bitcoin based on how well the turnip crops did this year. But without some sort of "anchor" like this, there's no way to figure out the value of a bitcoin, which is why it has such ridiculous volatility. |
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I’d love to see 1 bitcoin at the value of $10,000 by the end of 2018. I’m not sure how realistic that is. Going by price increases in 2017 I think it could be possible.
It has increased 5 fold this year so it is definitely a possibility. Going by that, we could even realistically predict 25k -30k which is just laughably high. slightly too boom for 25k -30k  . although it has increased by 5 fold this year but we can not be calculated by this multiplier. instead calculate how much it has increased, specifically it raises about $5000 so predictions can be in the $ 10k While I agree that another 5-fold increase over the next year would be a lot harder to achieve than this last 5-fold increase, why do you think that we should start looking at it from a dollar amount now instead of a percentage amount? So far, bitcoin has done a pretty good job of continuing to increase in price exponentially. That will have to stop at some point, but why now? (I'm not saying that you're wrong; I'd just like to know why you think we should change our perspective now.) |
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On being just another tulip mania bubble, I think the market has now become too sophisticated for that. Remember that tulip mania happened centuries ago. Right now, due to the presence of the internet, people are already more learned and if they are to give nod to something they always make sure they know what they are getting into. People these days are not as ignorant in the past and though greed remains the same Bitcoin has the mechanism of corrections to deal with the matter.
I would not count on any of this. Human psychology is still human psychology, which you seem to agree with since you said that greed remains the same. Look at the US housing bubble back in 2006/2007. Despite housing prices reaching ridiculous highs, there were still plenty of people who just kept investing money in mortgage-backed securities, companies that kept investing in credit default swaps, etc. Then there was the oil bubble in 2008--again, people just kept buying until the bubble burst. People do have better access to information than at any time in the past. But 1) that doesn't mean they use it (many people don't research stuff like they should, probably in part because that takes a lot of hard work to do well), and 2) there is a lot of info, but there's a lot of info on both sides (e.g., for and against bitcoin). You will find plenty of experts (whether they are or not) claiming that bitcoin is going to go to $10k+, and you'll find plenty that think it's a fad/fraud/bubble that's going to pop/crash and never recover. How do you know whom to believe? In fact, isn't it possible that all the info on the internet is leading even more people to believe that investing in bitcoin is a sure bet? If that does happen to be true (I really don't know if it is), then bitcoin might be in a bubble that's far greater than any ever seen in history. The tricky thing about bubbles is that they're usually hard to spot except in hindsight. |
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It is really hard to say if bitcoin is a bubble or not. What I know is that bitcoin don't offer anything
in return when you invest on it. And bitcoin is don't have any promises that it will perform well to
increase it's worth.
Bitcoin's price is merely from the demand it's getting from people without giving any promises. So is it a bubble?
Fiat currencies are literally worthless by definition so that argument doesn't really hold at all. Bitcoin takes a lot of effort/money to create and carries large risks, all of which are factored into the price. Furthermore, it's the gateway into a whole new class of investment assets, so that adds to the value of Bitcoin as well. And lastly, it has a technology driving it that is far superior to traditional financial instruments. So saying that Bitcoin doesn't offer anything in return is complete nonsense. I think AmXProX's point is that you can't trade bitcoin in for anything, just like you can't trade fiat in for anything (as opposed to a commodity-backed currency in which you can trade in the currency for the commodity). There are indeed things that make bitcoin valuable, but it's not backed by anything, and there's nothing to really determine how much it should be worth. Bitcoin could function just as well at $1000/coin as it can at $6000/coin. In fact, while the hash rate would drop and theoretically increase the potential for someone to mount a 51% attack against it, bitcoin would probably still function at $100, or maybe even $10. That's the case with any denominator though. Even if you take Gold and reintroduce it as a currency, nobody will be able to tell you what that piece of Gold should be worth. Because there is no such value. The value always strictly depends on two trading parties coming to an agreement. As such, it makes literally no difference whether we decide to all collectively use Gold, Fiat, or Bitcoin as our standard currency. The amount of goods traded will adjust accoding to the supply and demand of currency vs goods. Bitcoin is by far the most convenient and efficient solution though, and more sophisticated cryptos will be even more so. Ok, so this is kind of tricky, but I think we actually agree somewhat. The benefit of using a gold-backed currency (or gold itself) is that the supply is tangible, limited, and cannot be changed easily. In essence, your country's supply of gold represents the value/worth of your country's economy. If you have 1000 oz of gold, then each ounce represents 1/1000 of your country's economic output/worth/wealth. If your economy grows (increases in productivity and wealth), each ounce of gold is worth more, and vice-versa. The problem with fiat currency, of course, is that a government can increase the supply at will, which devalues it. Bitcoin is not tangible, but it does have the advantage of limited supply, and actually its even better than gold in that the supply is completely fixed (assuming that enough people don't decide to increase the cap, which hopefully will never happen). So I think that bitcoin could work just as well as gold as a currency, but the problem is that right now it doesn't. As a currency, it just sits next to all other currencies. It isn't backed by a particular economic system (like a country, state, etc.) that includes well-defined/well-known production or services of some sort, so it's not really possible to figure out how much it should be worth. |
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Certain chart patterns tend to work 1) because of the self-fulfilling prophecy effect and 2) because they indicate particular information about the view of the market participants as a whole. For example, double tops show a lack of buying interest by traders on the second peak. If the demand isn't there to move the price to fresh highs, the price rolls over and starts to fall as the rest of the market sees that new highs aren't about to happen, and they get out while prices are still good. That is the "educated" part.
In any trade, there is always an unpredictable chaos factor. Even if everything looks the same as a previous chart pattern, who's trading at that time and how they're feeling could be different, and there's just no way to know ahead of time. So in the end, you do have to make some sort of prediction or guess.
So yeah, I guess trading is just educated guessing. Just make sure the "educated" part is included. Otherwise, it's just gambling.
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Will the bitcoin price decline after bitcoin gold?
I read that many now will continue to sell bitcoin and buy altcoins.
Should I buy bitcoin now or wait?
After the bitcoin gold fork there was a slight drop on the price of bitcoin, from $5900 to $5400 but as of now 2 days after the fork prices are ranging from $5800 - $5900 again. So it is safe to say that BTG somehow affected bitcoin's price because the people who hoarded bitcoin to get their BTG tried released it at the same time after the fork but the market is stabilizing at a higher price now. Given how volatile bitcoin is, the drop from $5900 to $5400 may have been nothing more than routine price swings from day/short-term trading. In any case, bitcoin gold does not seem to have had much of an effect on the market. I guess things might change if more exchanges open up trading on it--it might pop like bitcoin cash did, which might cause some to sell bitcoin for bitcoin gold. But ultimately, I think bitcoin gold will end up nowhere, like bitcoin cash, and any negative effects it has on the price of bitcoin will be temporary. |
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